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Last Updated: Monday, 17 September 2007, 11:29 GMT 12:29 UK
Q&A: Microsoft anti-trust verdict
Windows XP
Microsoft says EU demands will allow competitors to copy its work

Microsoft has lost its long-running competition court case against the European Commission on all key points. But what's the impact of the ruling?

Why did Microsoft lose, and what is it all about?

Considering how fast the world of computing is evolving, this dispute feels a bit like ancient history.

The European Commission's competition watchdog had accused Microsoft of shutting out rivals from its Windows operating system to gain a larger share of the lucrative market for web servers.

A second dispute was about media players. Microsoft suddenly bundled its own media player with its Windows operating system, effectively giving it away for free. That undermined the business of rivals like Apple and Real Networks.

The EU's competition commissioner ruled that Microsoft had abused its dominant position in the computing world.

When it found that the US firm had failed to mend its ways, the commission imposed a record 497m euro (343m; $690m) fine, and subjected Microsoft to strict supervision.

Microsoft sued, but the European Court of First Instance has now found in the commission's favour in all substantive points.

Will the ruling change anything on my computer desktop?

Not really. If you want to, you can buy a version of the Windows operating system that does not contain the media player.

But the price difference is negligible - and you can always download the newest version of Microsoft's media player for free.

And don't forget: despite bundling its media player with Windows, Microsoft has ultimately lost out.

Its arch-rival Apple is dominating the market for music downloads with its iTunes software - which didn't even exist for PCs when the competition case first got going.

Meanwhile, in the world of servers the fight is still on, with the open-source Linux operating system making as strong gains in the market as Microsoft.

Surely Microsoft's competitors must be crowing?

Some will, but only a few.

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Microsoft has also been criticised for bundling software into Vista

Champagne-cork popping jubilations will probably be confined to the European Commission, and those people who hate Microsoft just for being Microsoft.

Most rivals have already settled their individual complaints directly with Microsoft.

And many will have taken note of Microsoft's dire warnings that a win for the European Commission will be a threat to any company that manages to dominate its market.

Microsoft also argues that the EU rules would allow competitors to copy its innovations.

The merits of these arguments are debatable, but firms such as Apple and search giant Google will have taken note.

What will the European Commission do next?

Get ready to see more crackdowns on dodgy corporate behaviour.

The European Commission recently lost a string of high-profile competition cases.

Had it lost against Microsoft, the future of its commissioner - Neelie Kroes - would have been in doubt.

Now she will feel emboldened to continue its push against anti-competitive behaviour.

But will Microsoft really change its ways?

Ah, that's the tricky part.

For a company that makes a profit of more than $1bn a month, the 497m euro fine is not going to hurt too badly.

However, the defeat in court was so comprehensive - Microsoft only managed to overturn a tiny detail in the EU's ruling - that it will have a moral and political impact on the company.

Microsoft's top lawyer has promised already that the company will comply with the European competition law, and said it would meet the commission to discuss the details.

And the company may still appeal to the European Court of Justice.



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